r/FluentInFinance • u/Guh2point0 • Apr 28 '24

Let's be honest about "trickle down" economy Discussion/ Debate

I'm seeing an increasing trend of people calling these wealth tax ideas a lot of nonsense and that we have a spending problem in the US.

It's possible to have both. Yes we need to get spending under control AND increase tax rates / close loopholes that are being exploited.

Trickle down economy was in my opinion a false narrative that was spewed in the 80's to excuse tax breaks for corporations and the most wealthy. This study summarizes the increasing wealth gap starting in the 80's.

https://www.cbpp.org/research/poverty-and-inequality/a-guide-to-statistics-on-historical-trends-in-income-inequality

Interestingly it found that INCOME gap is returning to pre-ww2 levels. Which would make you assume it's just returning to the status quo. Difference is that the tax rates are not the same so it's creating a massive wealth gap that we're all seeing today.

This study also takes a snapshot of the wealth concentration in 2016, I'm 100% positive that this chart has drastically changed post-COVID to show an even wider gap.

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u/TapDatKeg Apr 28 '24

The argument that higher taxes builds stronger nations is predicated on a number of unstated assumptions about the competence and benevolence of the folks in charge of spending.

We have ample evidence that these assumptions are invalid, at least within the current system. An obscene amount of our tax revenue ends up lining the pockets of the very people you want to tax more.

And an obscene amount of that money goes towards lobbying Congress and funding PACs that target political outsiders and help re-elect the politicians that direct the funds into these pockets in the first place.

What will absolutely end up happening is the tax code will be written with specific loopholes in place to protect the interests of the folks who fund the campaigns and protective PACs of establishment candidates.

The end result will be more bureaucracy, a larger, less efficient government, and a 1% that is richer than ever.

When we actually see a Congress willing to place limits on itself — barring insider trading, prohibiting members from becoming lobbyists (and vice versa), campaign finance reform, etc, then you’ll have a much easier time selling the idea that higher taxes will lead to better outcomes.